Bank deposits jump 11% as savings soar

After stockpiling cash aggressively for several years, local companies and consumers have cranked their financial hoarding up to new levels.

That’s the upshot from the Federal Deposit Insurance Corp.’s recently released annual snapshot of branch-level deposit data, which shows that local deposits soared 11 percent in 2012 to $143 billion.

That figure includes McLean-based Capital One Bank’s main branch, which saw its deposits surge 44 percent to $14.9 billion. When excluding that super-sized location, local deposits increased 8 percent, up from 5.8 percent growth last year.

A similar trend is playing out nationally, where deposits jumped 8.5 percent in 2012.

“People are putting money away, there’s no question about it,” said Jerry Hanweck, finance professor at George Mason University School of Management.

Consumers and businesses are still wary of investing in the stock market or other risky areas, opting for the safety of FDIC-insured bank accounts as they keep their powder dry.

Among the 20 largest banks in the area, all but two increased their deposits from a year ago, and seven posted gains of more than 20 percent. Virginia Heritage Bank and Cardinal Bank, both based in Tysons Corner, grew deposits by 40 percent. Reston-based Access National Bank saw 35 percent growth.

A good amount of the gains at Cardinal came from a high-yield checking campaign, which advertised 2 percent interest, said Chief Operating Officer Alice Frazier. The bank also got great results from a team focused on landing new deposits, she added.

Capital One Bank also has been pushing its high-yield checking account and “no ATM fees” benefit, which has helped it pack on $5.8 billion in fresh deposits — by far the largest growth for any bank in raw dollars.

Capital One is the largest bank in the area with $28.3 billion in deposits and 187 branches. In past years, the Washington Business Journal has excluded the bank’s main branch in McLean, which holds large deposits from across Capital One’s footprint and is bigger than all other local branches combined.

The Washington Business Journal began including this branch in its calculations for various reasons (related column, Page 68), and all the market share figures and metrowide totals in the charts accompanying this story have been adjusted to reflect that change going back to 2009.

One unintended consequence of the onslaught of deposits may be more aggressive lending. Banks make a lot of their profits off the difference between what they pay for deposits and the interest they collect on loans. But many banks haven’t been able to grow their loans fast enough to keep up with deposits, as relatively few creditworthy borrowers are looking for loans. As the imbalance between deposits and loans grows, banks in that situation will be under pressure to lend more competitively, said Frazier of Cardinal Bank, which is among the most aggressive lenders in the area.

The data are from the FDIC’s summary of deposits and include deposits in D.C.; Montgomery and Prince George’s counties and their municipalities in Maryland; Arlington, Fairfax, Loudoun and Prince William counties in Virginia; and Alexandria, Falls Church, Fairfax City, Manassas and Manassas Park.

Biggest banks in town: These banks held the most deposits in their Washington-area branches as of June 30, when the Federal Deposit Insurance Corp. takes its annual snapshot of branch-level deposits.